October 17, 2007 / 3:45 AM / 10 years ago

Complete Pentagon audit still years away

WASHINGTON (Reuters) - A complete independent audit of the U.S. Defense Department’s finances is still years away, but steady progress is being made to clean up the mess, a top Pentagon official told Congress on Tuesday.

The task will take years because the Pentagon used “an outmoded collection of disparate systems incompatible with each other” during “decades of dysfunctional financial management,” said David Patterson, the department’s chief financial officer.

“We are the largest entity in the world ever to consider being audited end to end,” he told a subcommittee of the Senate Committee on Homeland Security and Governmental Affairs.

Terming the department the world’s most complex organization, Patterson said it encompassed 600,000 structures in 163 countries; 5,624 information technology systems; 5.2 million inventory items and $3.4 trillion in assets and liabilities.

Including funds for the U.S.-declared global war on terror, the Pentagon’s annual operating budget tops half a trillion dollars.

“By the end of fiscal 2009, we expect that fully 39 percent of (Defense Department) assets and 90 percent of liabilities will have clean audit opinions,” Patterson testified.

Today, seven of the 11 major Defense Department “entities” have clean audit opinions, he said, putting their combined assets at 15 percent of the department’s total assets and 49 percent of its total liabilities.

During a break in testimony, Patterson told Reuters he anticipated the Marine Corps would be “audit-ready” around 2010, the first of the armed services to reach that point.

Getting set for auditing involves establishing the value of all assets and accounting for their depreciation, something the services traditionally overlooked, a senior Pentagon official said.

David Walker, comptroller general of the United States, told the panel he was growing increasingly frustrated with the Pentagon’s long-standing financial management and business weaknesses.

Without focused and sustained leadership to guide business modernization, “the department will continue to waste billions of dollars every year,” he testified.

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